Hey guys
There is a lot of demand in my country for rails and hosting, yet there is not one provider that does this. Are there packaged solutions, or at least guides, out there that can help me get started with providing hosting to people?
You can think of it as a local Heroku.com
No offence but if you have to ask you can't do it and a quick google search pulled up plenty of hosts in SA tailored for rails.
I think there is no detailed guides, because every hosting is differs because the demands are different.
For a small sites the Apache/NginX and Phusion Passenger will be very good, because it is easy to use. For large sites, a dedicated VPS is a better solution, because it cannot stale performance (e.g. memory) from other sites.
Some special cases, you can use separated mongrel or webrick instances and proxy them over the webserver.
See the following keywords in google: capistrano, phusion passenger, ruby enterprise, linux rails hosting, xen vps hosting.